Though the recession crimped some end-markets of Badger Meter, Inc. (NYSE:BMI) and took a toll on its top line, in August, the company increased the quarterly DPS by 5.9%. So, it appears that even a harsh crisis cannot shatter the dividend growth story of BMI, a company that has been increasing the dividend consistently for 28 years. Unfortunately, due to its mid-cap size, it is not a dividend aristocrat, as to qualify for this upper-echelon status, it must be a constituent of the S&P 500.

I am fairly impressed with BMI’s dividend consistency, copious operating and free cash flows, and almost bulletproof balance sheet. But the essential concern that hinders me from giving the stock the bullish rating is its lofty valuation, which noticeably deviates from the five-year averages. Another issue is that the ~1.1% dividend yield does not match my investment preferences.

The top line: navigating the recession

Badger